Comcast bid looks to merge NBCUniversal with WBD, give David Zaslav management role

Specifics about Comcast’s “sweetened” bid for Warner Bros. Discovery are becoming public.

A Tuesday report in Bloomberg reveals that Comcast’s offer intends to merge its NBCUniversal division — which controls the NBC TV network, its film and TV studios, theme parks, and streaming service Peacock — with Warner Bros. Discovery’s streaming and studios assets. The report also suggests that current Warner Bros. CEO David Zaslav would receive a management position in the newly combined entity.

Analysts have speculated that one of the best paths forward for Comcast in its quest to win the bidding war for Warner Bros. is to structure the deal as a Reverse Morris Trust, a type of transaction that allows a company to sell part of its business tax-free by merging it with another company. Such a structure could help Comcast close the gap between its offer and those of its cash-rich competitors, Netflix and Paramount.

However, Bloomberg’s Lucas Shaw suggests that this offer is not structured as a Reverse Morris Trust. The Bloomberg report indicates that Warner Bros. shareholders would receive a combination of cash and stock in the new entity. Other than that, details about the deal structure are sparse.

On Monday, it was reported that Paramount has given Warner Bros. a “100% cash” offer that is partly backed by Middle Eastern sovereign wealth funds. Netflix’s offer is reportedly “mostly cash.”

For its offer to be competitive, Comcast would need to convince the Warner Bros. Discovery board that a combined NBCUniversal-Warner Bros. entity could generate more value for its shareholders than the all- or mostly-cash offers currently on the table. The company could create a compelling argument that combining HBO Max with Peacock could create a competitive streamer with a robust on-demand library and extensive live sports portfolio. The Warner Bros. intellectual property could also prove a boon to its Universal theme parks business.

It should be noted, Comcast’s offer would not include any of the NBCUniversal assets being spun off into Versant, nor any of the Warner Bros. assets being spun off into Discovery Global.

Bloomberg reports that a decision could be made by Warner Bros. Discovery in the “coming days.”